Obama Versus the Billionaires

http://www.futureofcapitalism.com/2010/09/obama-versus-the-billionaires

It's worth spending some time parsing President Obama's statement from earlier today, "If you are making $1 billion a year after a very bad financial crisis, then I think that you shouldn't be feeling put upon."

Think about the hedge fund managers of whom Mr. Obama is speaking. First of all, some of them may have lost $1 billion, or more, the year before. Some of them may lose $1 billion in the year ahead. Looking at one year in isolation doesn't capture the reality of the situation.

Second of all, most of these people make their livings by managing money, some of which is their own and some of which belongs to partners who invest it voluntarily. If a hedge fund manager made $1 billion, it generally means that the partners whose capital he is investing had a good year, too. Making lots of money is what the customers of a hedge fund want the hedge fund manger to do. It's a partnership.

President Obama seems to think that the reward for hedge fund managers who perform well for their customer/partners should be to stand still while the president vilifies them as fat cats and tries to triple their taxes. At what threshold does Mr. Obama think it would be appropriate for them to feel put upon? If he proposed to quadruple their taxes? To cut off their arms and legs?

If a group of Americans were singled out by the president for insults — "fat cats" — or specially targeted tax increases, you might be able to understand why they might feel put upon. But its sounds as if Mr. Obama expects the fund managers to just submit without a peep of protest. Do they have different rights from other citizens?

It's one thing for Mr. Obama to opine on what's the appropriate tax rate. It's another for him to opine on how his targets should "feel."

Mr. Obama's follow-up line comparing the fund manager's tax rates to their secretaries is a favorite of Warren Buffett, who doesn't pay much tax himself yet is eager to see rates raised on his competitors (perhaps so the government will have more money to spend on subsidizing Mr. Buffett's businesses, including CNBC's corporate parent, at least for now, GE).

by Ira Stoll  |  Sep 20, 2010 at 3:07 pm Related Topics:  President Obama, Taxes, Warren Buffett receive the latest by email: subscribe to the free futureofcapitalism.com mailing list